National Basketball Association

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National Basketball Association
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Chicago Bulls Mission Statement

• We aim to achieve our mission by working hard to
  emphasize the following core values
  
• Mutual respect for each other, and a commitment
  to excellence, innovation, integrity and quality
  in everything we do.
  
• By providing our guests with superior
  entertainment value in a clean, secure, and
  comfortable environmentwin or loseregardless of
  their interest level in basketball.
• By helping our sponsors build their brands and
  grow their business.
  
• By treating our respective constituencies with
  respect, appreciation, and as we ourselves would
  want to be treated and serviced. In other words,
  by putting our fans and sponsors first every
  single dayand meaning it.
• By making our community a better place to live
  through our support of worthy social causes.
  
• By involving our guests in the game as active
  participantsnot merely spectators.
  
• By knowing who and where our fans are, and
  reaching out to them.
  
• By working hard to make NBA basketball the most
  popular sport in our community and by selling and
  humanizing our players to everyone we meet.
  
• By being proactive and accountable in carrying
  out our mission.

• The Chicago Bulls organization is a sports
  entertainment company dedicated to winning NBA
  Championships, growing new basketball fans, and
  providing superior entertainment, value and
  service.

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National Basketball Association

• Teams share about 67 of revenues from the
  national television contract.
  
• Teams do not share local broadcast revenues
  (which can be significant) or facility revenues.
  
• Has a soft salary cap (actually an aggregate
  payroll cap), which through the Collective
  Bargaining Agreement gives players a projected
  51 of basketball-related revenues, including
  national media, gate receipts, merchandise sales,
  40 of signage, 45 of luxury suites, and 45 of
  personal seat licenses

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NBA Television Contracts
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National Basketball Association

• Any signing bonus, limited to 20 of base salary,
  is prorated over the length of the contract.
  
• Uniform player contract states that players may
  be suspended or expelled for betting on NBA
  games.
  
• Teams may terminate the contract of a player
• Conduct issues
• Personal attack on an official, team or league
  employee, or fan
  
• Lack of skill resulting in the request for
  waivers if not claimed, the player must be given
  termination pay equivalent to the remainder of
  that years salary

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National Basketball Association

• Exceptions permit teams to exceed the payroll
  cap.
  
• Veteran free agent exception
• Bi-annual exception
• Mid-level exception
• Minimum player salary exception
• Traded player exception
• The payroll cap has limited player mobility under
  free agency.
  
• Has minimum and maximum salaries.
• Has a minimum team salary threshold.
• Focuses on the promotion of individual stars to
  offset the lack of competitive balance.

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NBA Properties, Inc.

• Sole authority for the marketing and licensing
  for all trademarks and logos of NBA teams
  nationally and internationally and shares the
  revenues equally among the teams.
• Licenses players names, numbers, jerseys,
  trading cards, video games, and other merchandise
  and distributes revenues equally among the
  players.
• Marquee players may opt out or negotiate a higher
  percentage of these revenues.
  
• The National Basketball Players Association does
  not enter into group licensing agreements.

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National Basketball Association Draft

• Draft (only two rounds with one pick in each
  round per team) is the exclusive process for
  players to enter the league.
  
• Includes all emerging players, including
  international stars
  
• Drafted players who have exhausted their
  collegiate eligibility are reserved one year by
  the teams that drafted them.
  
• If a player sits out and enters the draft again,
  the player is reserved one year by the team that
  drafted him in this subsequent draft.
  
• If not drafted, a player is an unrestricted free
  agent.

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National Basketball Association

• If players with collegiate eligibility declare
  for the NBA draft and are unrepresented, they can
  
  
• Renounce their declaration until one week prior
  to the draft or
  
• Notify the NBA after the draft of their intent to
  preserve their college eligibility (but they
  remain the property of the NBA team that drafted
  them for one year)

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National Basketball Association

• In 2005 in the Collective Bargaining Agreement,
  the NBA and NBPL agreed to a minimum age
  requirement of 19 by the end of that calendar
  year and at least one year removed from high
  school to be eligible for the draft.
• The court may defer to this agreement given legal
  precedents that permit a collectively bargained
  agreement to be made without those impacted being
  at the negotiating table.

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National Basketball Association

• Possible reasons why the NBA banned high school
  players from the draft
  
• Concern for their welfare, which could be viewed
  as paternalism
  
• Desire to provide the best quality product by
  using the colleges for at least one year to
  develop players skills and abilities
  
• Do not want to incur the risk and cost of
  scouting, drafting, and developing high school
  players

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National Basketball Association

• Maybe the real reason is to preserve the
  profitability of collegiate basketball.
  
• College coaches were upset when high school
  superstars signed a national letter of intent but
  then did not matriculate thus diminishing the
  quality of a teams play and its potential for
  winning.
• Fewer outstanding college players reduces the
  popularity of televised games (and revenues to
  institutions).

College basketball is a cost-free player
development system for the NBA.
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Why would high school players want to challenge
the ruling that they must wait one year to be
drafted?

• In the past, high school players have proven to
  be the most successful group of players entering
  the draft (i.e., the NBA system dictates this
  outcome because players can become free agents at
  earlier ages and thus have more years in their
  prime to play).
• Players who skip college have huge financial
  incentives to enter the draft early (i.e., they
  could earn as much as 100 million more over
  their careers than those who earn a college
  degree so, play first, study second).

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Why would high school players want to challenge
the ruling that they must wait one year to be
drafted?

• Delaying entering the draft endangers their
  attraction due to a failure to meet expectations
  or injury.
  
• It is challenging to play Division I-A basketball
  and earn a degree and the value of this degree
  may be overstated given the earning potential of
  the best players.
• College players going into the NBA are expected
  to make an immediate impact, while high school
  players are viewed as developmental projects
  (i.e., more time and opportunity to prove
  themselves).
• But, what about those who are not the superstars
  and do not have any or only a short NBA career?

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National Basketball Association

• Rookie salary scale was established to eliminate
  holdouts (desired by teams) and reduce the size
  of rookie contracts (desired by owners and other
  players).
• Initial contracts are limited to three years and
  salaries are based on draft order.
  
• Teams hold a fourth-year option after which
  players can become restricted free agents, which
  permits the original team to match the offer of
  any other team.
• Second-round draft selections can be signed for
  as low as the NBA minimum salary and their
  contracts do not have to be guaranteed.